Royal Bank of Canada, China's CITIC Group and Morgan Stanley are among several investors seriously considering bidding for a stake in China's top lathe maker, two sources familiar with the matter said.

The Chinese government announced a plan in November to auction a 49 percent stake in state-controlled late maker Shenyang Machine Tool (Group) Co. Ltd., drawing interest from domestic and foreign investors. The source, who is close to Shenyang Machine, said the Chinese company estimated it had a net asset value of 2.57 billion yuan ($329 million).

Royal Bank of Canada officials was not immediately available for comment. CITIC and Morgan Stanley declined comment. China has become a magnet for global investment firms and private equity funds, which are flocking to cash in on the country's breakneck economic growth of 10 percent annually.

The considerations underscore the huge foreign interest in the country's industrial assets, even though several high-profile cases -- including Carlyle's deal for Xugong, the country's top machinery maker -- had been delayed for over a year amid rising concern that sensitive state assets might be sold too cheaply.

To bolster its chances, Carlyle agreed in October to cut the size of its proposed stake in Xugong to 50 percent, from an originally planned 85 percent. CITIC Securities, possibly bidding on behalf of its parent, was eyeing a 30 percent stake, so was Morgan Stanley, they said. China only allows foreign investors to take a maximum 30 percent stake in Shenyang Machine.

Royal Bank of Canada agreed last year to set up a $25 million fund management venture with China Minsheng Banking Corp., marking its first investment in the country's fast-growing asset management industry. Goldman Sachs, Carlyle and privately held Chinese firm Fosun Group had also contacted Shenyang Machine regarding a possible deal.

Shenyang Machine, based in the northeastern province of Liaoning, has two local listed units -- Shenyang Machine Tool and Jiaoda Kunji High-Tech Co. Shenyang Machine Tool (Group) Co. Ltd. has total assets of 7.99 billion yuan, including 2.0 billion yuan in fixed assets and 5.5 billion yuan in current assets. Liabilities at the company, which employs 11,171 people, stand at 5.7 billion yuan.

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